Akums Drugs — Q4 FY25 earnings call

Call held 27 May 2025

Management summary

Akums Drugs reported a mixed Q4 and FY25, with flat full-year revenue but improved PAT. The company secured a significant EUR200 million CDMO contract and increased R&D investments, driving new product launches. However, API and trade generic businesses remain loss-making, and API price volatility continues to be a headwind. Management is focused on consolidating loss-making segments and expanding global CDMO presence.

Highlights

  • Full year FY25 PAT increased to INR234 crores, up 6.36% from INR220 crores in FY24.

  • Q4 FY25 total income grew 12.4% year-on-year to INR1,073 crores.

  • Secured a EUR200 million CDMO contract, with EUR100 million received in April '25, boosting liquidity.

  • R&D spend increased by 16% to INR130 crores in FY25, leading to 31 new DCGI product launches.

  • Domestic branded business showed strong growth with 9% revenue increase and 12% EBITDA growth for FY25.

Concerns

  • Full year FY25 revenue was flat at INR4,170 crores, a 1% decline from FY24.

  • API business remains loss-making, with FY25 EBITDA losses at INR44 crores.

  • Trade generic business revenue declined significantly by 34.6% to INR115 crores in FY25, with Q4 losses increasing to INR10 crores.

  • CDMO EBITDA for Q4 FY25 was INR89 crores, down 27% QoQ from INR121 crores in Q3 FY25.

  • API price volatility continues, impacting revenue growth and delaying API business turnaround.

Key financials

2 periods

Q4 FY25

  • Total Income
    ₹1,073 Cr
    YoY +12.4%
  • PAT
    ₹44 Cr
    QoQ -33.3%

FY25

  • Revenue
    ₹4,170 Cr
    YoY -1%
  • PAT
    ₹234 Cr
    YoY +6.4%

What they filed

Q1 FY27: revenue up 18.1%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue328 337 329 332 309 −6%369 +9%338 +3%392 +18%
EBITDA43 34 18 44 17 −60%25 −26%12 −33%49 +11%
Net profit50 41 28 45 23 −54%28 −32%15 −46%45 +0%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of FY25 Revenue
₹4,119 Cr Total
  • CDMO Business ₹3,208 Cr 77.9%
  • Domestic Branded Segments ₹434 Cr 10.5%
  • API Business ₹219 Cr 5.3%
  • International Branded Segment ₹143 Cr 3.5%
  • Trade Generic Business ₹115 Cr 2.8%

Order book

high confidence

Total value

EUR 200 Mn

as of 2025-03-31 quantified

Execution

Supplies for this will commence in 2027, most likely in Q4 of '27, around February/ March of '27. This is a 6-year contract.

This contract is expected to generate INR300-350 crores in annual top-line business at steady state (FY28 onwards) with similar margin profile to CDMO business.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹300 Cr
    • Maintenance and modernization ₹100 Cr
    • Growth capex (Jammu, liquid oral for European business, oncology, steroids) ₹200 Cr
    In the coming year, we have a Capex plan of approximately INR300 crores, wherein we will expand our product offering by setting up lines for oncology, steroids, FFS LVP, amongst other things. we are looking at almost a INR300 crore capex in this year, of which we think close to INR100 crores, one third of the total capex will go into basically maintenance and modernization and the growth capex would be on INR200 crores for the year. First, we will put in Jammu. Apart from we liquid oral for our European business. And also in oncology and steroids we are going to provide.
  • Liquidity Cash ₹566 Cr Company has a war chest and cash surplus of INR1,520 crores as of May 27, 2025, which includes INR950 crores (EUR100 million) received in April '25 as part payment for the EU contract. They can also avail OD facility on existing FDs.
    We got INR950 crores. We had the surplus cash of INR566 crores, so the company today has a war chest and cash surplus of INR1,520 crores. So about 1,000 crores have with us. So while the endeavour is we'll have this money with us, but if needed, we can already have an OD facility on the FD we have created. So this is a subsequent event, you look at the net surplus, you will see number 566, cash or cash equivalent. So, if we try to reconcile it with the balance sheet, then we will not be able to do it now because the money has come on 9th.

Guidance & targets

Volume

  • CDMO Volume Growth Volume · FY26 · High confidence single-high-digit
    So what we expect in FY '26 is that we'll have a single-high-digit volume growth.

    — Sahil Maheshwari

Profitability

  • API EBITDA Losses Profitability · FY25 · High confidence ~INR25 crores

    Previously >INR40 crores → ~INR25 crores

    this year will be in the range somewhere around INR25-odd crores.

    — Sahil Maheshwari

  • API Business Breakeven Profitability · FY27 · High confidence breakeven or single digits of EBITDA losses
    FY '27 is a year which we think we might be breakeven or single digits of EBITDA losses.

    — Sahil Maheshwari

Revenue

  • International Branded Business Growth Revenue · FY26 · High confidence at least 20%
    Yes, yes, there is scope also, and we will definitely achieve it, in this financial year we will achieve it.

    — Sandeep Jain

  • European Contract Annual Revenue (Steady State) Revenue · FY28 onwards · High confidence INR300-350 crores
    FY '28, we should reach the full steady state of INR300 crores, INR350 crores or it takes some time to...

    — Madhav

Margin

  • European Contract Margins Margin · High confidence around 15%
    So, that is why we did not focus so much on margins here and it is somewhere around 15% margins that we will get.

    — Sandeep Jain

Tax

  • Tax Loss Utilization Tax · next 4 years · High confidence utilize losses
    We should, in the next 4 years, be able to utilize these losses.

    — Sumeet Sood

Market context

  • Domestic Branded Business Growth Revenue · Medium confidence double-digit
    So this is a business where we are targeting a double-digit top line growth, which is -- which will be higher than the overall Indian pharma market.

    — Sahil Maheshwari

What to watch in Q1 FY26

API Business Loss Reduction

Next quarter (Q1 FY26) for progress towards FY25 target
Current INR44 crores (FY25 EBITDA loss)
Target ~INR25 crores (FY25 EBITDA loss)

Why it matters

Key to improving overall company profitability and achieving the FY27 breakeven target.

this year will be in the range somewhere around INR25-odd crores.

Risks & concerns

  • API Price Volatility

    medium

    Volatility and downward trend in API prices continue, impacting revenue growth and delaying API business turnaround.

    Management acknowledged

  • Loss-Making Trade Generic Business

    medium

    The trade generic business is continuously loss-making, with revenue declining and Q4 losses increasing, necessitating consolidation efforts.

    Management acknowledged

  • Loss-Making API Business

    medium

    The API business continues to incur EBITDA losses, though efforts are underway to curtail them and achieve breakeven by FY27.

    Management acknowledged

  • Muted Indian Pharma Market Demand

    low

    Overall demand in the Indian pharma market was soft due to muted industry volumes, impacting revenue growth.

    Management acknowledged

Q&A highlights

8 direct
CDMO Margins Volatility in Q4 Direct
So Q4 usually has a product mix or a product profile which is of lower gross margins compared to the other quarters. So that remain there. So if we look at really 9 months and 3 months of this quarter. So broadly, more than half of this, it was on account of higher COGS, which is a product mix, but this is a quarter-on-quarter phenomena.

Clarifies the reasons behind softer Q4 CDMO margins, attributing it to product mix and seasonal factors rather than structural issues.

Asked by Vivek Agrawal

Future of Loss-Making Trade Generic and API Businesses Direct
See trade generic we are seeing it from last two, three years. So we are not able to see significant positive results. So now we are in the process of consolidating this business or at least to maintain that this losses should not go to the next year forward. So we are in the process of consolidating this business. ... As far as API is concerned, we are still there in the business and we'll remain to be there in the business. We are trying to curtail our losses.

Management outlines a clear strategy to address loss-making segments: consolidating trade generics to retain only profitable parts and actively working to reduce API losses.

Asked by Vivek Agrawal

Deployment of EUR100 Million (INR950 Cr) Cash from EU Contract Direct
One is this specific money which has been parked there is a purpose behind that and we have to utilize that in that purpose only as and when our products will come, but because we are cash positive, we are looking for some merger and acquisition opportunities or different type key merger, of course, within the pharma space only and which are profitable and who will add value add to our supply chain and our product mix and our client mix.

Reveals the company's dual strategy for the cash: funding the EU contract and actively seeking M&A opportunities to enhance product mix and supply chain.

Asked by Abdulkader Puranwala

API Business Breakeven Timeline and Strategy Direct
A lot will depend on how the Cephalosporin prices move, which will drive our next year profitability. But next year, the endeavour is to bring down the losses consistently. So whether it will be zero for the year or it would be single-digit losses, we'll really have to look at because this is a commodity Cephalosporin business as of now. ... So there are 2 things in parallel what we are doing. One is we are exploring the global market. ... The second thing is domestic may be expanding the client base to ensure that the kind of market which we serve, we are fully entrenched into the domestic market and cost reduction has always been our focus in this business for the last 2 years, right?

Provides a detailed plan for API business turnaround, focusing on global market expansion (CEPs), domestic client base expansion, and cost reduction, while acknowledging dependence on Cephalosporin prices.

Asked by Pranav Chawla

CDMO Utilization Levels Compared to Peers Direct
We work for multiple clients, like over 1400 clients with 4,000 different products and with around 18,000 different SKUs. So there are so many plants like and dosage forms as well... So if you look at this, capacity or specific capacity it is utilise there also in changeovers. Secondly, it like large volume parentals, injectables, and we achieve 70%, 80% capacity of this, wherein tablet, capsule, so number of changeovers we use less capacities.

Explains that lower blended utilization is due to high product mix complexity, numerous SKUs, specific plant types (e.g., hormone facility), and high changeovers, rather than lack of demand.

Asked by Naman Bhansali

Accounting for European Contract Payment and Expenses Direct
So this on the basis of the accounting standard would work on a composite accounting, right? So the expenses get charged off when the revenue recognition happens, right? Because the enduring benefit will be over the period when the revenue comes in. While there would be capital expenditure, which will happen, but as I said that this will be on the basis when the revenue comes in. ... No, not on the 31st. So it came on 9th of April, right? So this is a subsequent event, you look at the net surplus, you will see number 566, cash or cash equivalent.

Clarifies that expenses related to the EU contract will be capitalized and recognized with revenue starting Q4 FY27, and the EUR100M payment was a post-quarter event, impacting current liquidity but not Q4 balance sheet.

Asked by Dheeresh Pathak

API Business Breakeven Revenue Level Direct
I think once we do almost 2x the size of the current revenues will be better off in terms of a profit-making business.

Provides a quantitative target for API revenue growth needed to achieve profitability, indicating a significant scale-up is required.

Asked by Gautam Gosar

Management Changes (CDMO CEO, Domestic Formulation CEO) Direct
See, in any industry, attrition is a normal process and because of his personal reason, he wanted to go. So, of course, we are in the process of hiring a few key people. But we always search for the right people. ... So, it's not like we just want to fill a post. Business is going on, but we want to manage the business more professionally through professionals.

Management acknowledges the departures but frames them as normal attrition, emphasizing a focus on strategic hiring of best-in-class professionals rather than simply filling roles.

Asked by Naman Bhansali

3 min read 8 chapters

Detailed narrative

Q4 & FY25 Performance Overview

Akums Drugs reported a flat revenue growth for FY25 at INR4,170 crores, a 1% decrease from INR4,212 crores in FY24, primarily due to API price erosion and muted industry volumes. Despite these headwinds, the company's PAT for FY25 increased to INR234 crores from INR220 crores in the previous year. Q4 FY25 saw a total income of INR1,073 crores, marking a 12.4% year-on-year increase, with a PAT of INR44 crores.

CDMO Business Performance and Outlook

The core CDMO business experienced flat revenue growth for FY25, with a 2% decline to INR3,208 crores and a 7% decrease in EBITDA to INR454 crores, largely attributed to API price erosion. However, Q4 volumes grew 9% year-on-year, and the company anticipates single-high-digit volume growth for FY26. Management noted that Q4 margins were softer due to product mix and higher COGS, a typical seasonal phenomenon.

API & Trade Generic Business Challenges

Both the API and trade generic businesses continued to be loss-making. The API business recorded FY25 EBITDA losses of INR44 crores, a slight improvement from INR46 crores last year, with a target to reduce losses to ~INR25 crores in FY25 and achieve breakeven by FY27. The trade generic business saw a significant revenue decline of 34.6% to INR115 crores in FY25, with Q4 losses increasing to INR10 crores, prompting management to consolidate and retain only profitable portions.

International Expansion & Regulatory Milestones

Akums made strides in global CDMO expansion by signing a EUR200 million contract with a global pharma company, with supplies expected to commence in Q4 FY27. The company received EUR100 million as part consideration in April '25. ANVISA audited its injectable facilities in April '25, with approval anticipated in the next quarter, which is crucial for European market entry. The international branded segment grew 14% in FY25, with a target of at least 20% growth in FY26.

Domestic Branded Business Growth

The domestic branded formulation business performed well, with 9% revenue growth and 12% EBITDA growth for FY25, reaching INR434 crores and INR77 crores respectively. The company's IPM ranking improved to 58 in FY25, and it expanded its sales team by 14%. The focus remains on specialty physicians (70% coverage) and chronic portfolios (70%+), particularly in gynaecology and cardio-diabetes, targeting double-digit top-line growth.

Capital Expenditure & Strategic Investments

Akums has a Capex plan of INR300 crores for FY26, with INR100 crores allocated for maintenance and modernization, and INR200 crores for growth initiatives. These growth investments include setting up lines for oncology, steroids, FFS LVP, and expanding liquid oral capacity for the European market. The company is also actively exploring M&A opportunities within the pharma space to add capabilities, product lines, or market access.

Liquidity & Financial Strength

The company maintains a strong liquidity position, reporting a cash surplus of INR566 crores as of Q4 FY25. Including the EUR100 million (INR950 crores) received in April '25, the total war chest and cash surplus stands at INR1,520 crores. Working capital management improved, with net working capital days reducing from 99 to 91 days, providing ample resources for strategic investments and operations.

R&D and Product Development

Akums increased its R&D spend by 16% to INR130 crores in FY25, demonstrating a commitment to innovation and portfolio expansion. This investment supported the launch of 31 DCGI products, including Empagliflozin and its combination, Silodosin, and Mirabegron. The company also expanded capabilities for niche offerings like nasal sprays, eye drops, bilayer tablets, ampules, and FFS small volume parenterals.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Healthcare earnings calls